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Goldman Selectively Bullish On Macau

Wynn Resorts, Limited NASDAQ:WYNN, MGM Resorts International NYSE:MGM - Goldman Selectively Bullish On Macau

It may finally be time for investors to start dipping their toes back into Macau casino stocks. However, Goldman Sachs analyst Simon Cheung believes investors still need to be selective. According to Cheung, Wynn Resorts, Limited WYNN and MGM Resorts International MGM are Goldman’s two preferred U.S.-listed Macau plays.

Wynn Macau

Goldman is positive on Wynn Macau, and Cheung mentions several key takeaways from the company’s Q1 report. First, Wynn Palace remains on schedule to open in Q3, and management is optimistic about table allocations for the new resort. In the month of April, the company saw continued stabilization in the VIP segment and year-over-year growth in mass market numbers. Finally, management doesn’t anticipate the new ban on phone betting in Macau will have a significant impact on business.

Goldman maintains a Buy rating on Wynn’s China unit.

Related Link: Is Macau Performance Turning Around Or Is It Still Heading To The Earth's Core?

MGM Macau

MGM has a similar set of potential positive catalysts in the works. The company noted improving player numbers and volume in late April into May Golden Week. In addition, MGM Cotai is on schedule to open in Q1 of 2017.

“Competition from new projects this year may present near-term risk, but valuation looks attractive at 8.8 percent FCF yield (ex-uncompleted project) vs. sector average of 7.7 percent,” Cheung explained.

Goldman maintains a Buy rating on MGM’s China unit.

Other Names

The firm has Neutral ratings on the China unit of Las Vegas Sands Corp. LVS and Melco Crown Entertainment Ltd (ADR) MPEL.

Disclosure: The author is long MPEL.

Apr 2016CLSADowngradesBuyOutperform
Apr 2016Deutsche BankDowngradesBuyHold
Apr 2016CitigroupMaintainsBuy

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